By Robb M. Stewart
MELBOURNE, Australia--Australian equities rebounded Friday in
the wake of a surge on Wall Street as recent worries about when the
Federal Reserve will begin trimming its monetary stimulus measures
gave way to positive economic news.
A push by the Dow Jones Industrial Average above 16,000 points
for the first time set the tone for markets across Asia after Janet
Yellen, widely recognized as a dove unlikely to change monetary
policy at the Fed, moved a step closer to taking over the top job
at the central bank. That followed strong U.S. jobs and
manufacturing data that suggests the economic recovery in the U.S.
still has traction.
The local benchmark index rose strongly through the course of
the session, trimming the week's loss to 1.2%--still the sharpest
decline in one and a half months.
"Cyclical names have finished the week on a strong note with
industrials leading," said Stan Shamu, a market strategist at IG in
Melbourne. "Mining services companies had been a major drag on
industrials for most of the week, but have really come to life
today."
The local currency remained under pressure, having hit a
two-month low late Thursday against the U.S. dollar after the
governor of the Reserve Bank of Australia's governor said he
remained open to intervention on the exchange rate. Traders have
interpreted the comments as further jawboning from central bankers
keen to push down a strong Australian dollar that has crimped
exporters and added to local costs for mining companies.
The S&P/ASX 200 finished Friday 0.9% higher at 5335.9, the
first daily rise of the week.
"Share markets were under pressure again from 'taper' talk over
the last week, which resulted in a somewhat volatile ride," said
Shane Oliver, head of investment strategy at AMP Capital.
"This is likely just a pause ahead of the resumption of the
rising trend as valuations are reasonable, monetary conditions are
set to remain very easy and profits are likely to improve next year
as global and Australian growth picks up," Mr. Oliver said, adding
the benchmark index remained on track to hit 5500 or even higher by
year end.
Mining services companies that were weak earlier in the week
following a profit warning from WorleyParsons recovered, with
Monadelphous Group up 3.5%, Ausdrill up 4.2% and WorleyParsons up
1.8%.
Big mining companies also gained, with BHP Billiton and Rio
Tinto both gaining 0.7% after the chairmen of both in separate
speeches in recent days said they remain confident China will
continue to drive commodities demand.
Shares in the country's four big banks all rose, with
Commonwealth Bank up 0.5% and Australia & New Zealand Banking,
National Australia Bank and Westpac up 0.7%. The four are still
down an average 1.5% for the week.
David Jones gained 2.1% for the day after staging its annual
shareholders' meeting, at which Chief Executive Paul Zahra said the
retailer is well prepared for the key Christmas trading period.
Rival retailer Myer climbed 2.5%.
Write to Robb M. Stewart at robb.stewart@wsj.com
